Open services like Twitter are, of course, vulnerable to misinformation, and events like a Twitter-induced flash crash may be the unfortunate result. The reality, however, is that these events draw more users into the medium than chase them out, with active monthly users of Twitter increasing by 9 million users during Q4 2013.
The use of social media is not limited to proprietary traders, as sell-side brokers and buy-side execution desks share in their thirst for more communication. This has led to problems, with banks including Barclays and Citigroup, among others, recently banning employees from the use of social media and chat rooms following the Libor interbank lending rate scandal of last year. At the same time, vendors are looking for ways to tap into this vein, as the amount of legitimate order flow that passes through chat networks is startling.
Submitting orders to a broker through a chat mechanism is certainly less error-prone than phone calls, which can easily lead to translation errors and misunderstanding. This practice has become so pervasive that some brokerage desks have individuals assigned to do little more than man their chat networks to field incoming orders and relay fills.
Social media is more than a means of chatting with peers and pushing your corporate or personal brand. Platforms like Twitter are similar to a Massive Open Online Course (MOOC) with a giant virtual playground. The informality of the messaging medium adds huge value for product managers, as the immediacy of feedback is welcome.
On a recent morning, I maintained open conversations with a fixed income trader in the U.K, a foreign exchange trader in Texas and an energy trader in California. Each of the individuals talked openly about their needs and spoke about the perceived deficiencies in execution software. All of this went on while I was tapping away on my iPhone, riding a train to the office. The informality, ease of use and 140-character limit contribute to making Twitter an ideal platform of communication for people whose work can change in a moment’s notice. It also offers that thin veil of obscurity where participants tend to speak more freely than they may in a face-to-face meeting.
Video conferencing avenues like Skype and Google Hangouts are adding live video chats for individuals and groups alike. The certain advantage to the video conference allows participants to share what they say and demonstrate how they go about their trades. From a product manager’s perspective, this is another bonanza. Talking our users as well as our own staff through functionality is a pain-free process when I can quickly start up a video Hangout to show the software on my desktop and graphically walk them through the features.
This commentary originally appeared on Trading Technologies’ TradeTalk blog.